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October, 2011

The Indian Railways - one of the largest developed networks in the world is the major catalyst to infuse socio-economic growth in the country's economy. India's premier transport and logistics organisation - Indian Railways -has the largest rail network in Asia and is the world's second largest, working under a single management.

The Indian Railways is one of the top employers, employing more than 1.39 million employees. It is also the fourth largest freight carrier globally, according to a report by the Ministry of Railways. Acting as one of the major promoters to the growth of the Indian economy, Indian Railways is the largest rail network in Asia covering a total of distance of 6,332 kilometers (km), it runs 19,000 trains everyday.

Sector Structure/ Market Size

Indian Railways has generated earnings worth Rs 48,947 crore (US$ 10 billion) between April-September 2011 as compared to Rs 44,338 crore (US$ 9.05 billion) during the same period in 2010, registering an increase of 10.40 per cent.

Railways carried 389.07 million tonnes (MT) of commodity-wise freight traffic during April-August 2011 as compared to 366.74 MT carried during the corresponding period last year, registering an increase of 3.78 per cent. The freight carried shows an increase of 22.36 MT over the freight traffic of 366.71 MT actually carried during the corresponding period last year. The Net Tonne Kilometres (NTKM) went up from 257,813 million during April-August 2010 to 243,779 million during April-August 2011, showing an increase of 4.10 per cent.

The Indian Railways is expected to receive Rs 45,289 crore (US$ 9.24 billion) in 2011 through e-payment for moving freight traffic, fetching two-third of the total freight earnings of the country's largest employer. The e-payment mode is quite achievable now by using the 1,500 terminal management system (TMS) and 800 nodes of TMS.

Foreign direct investment (FDI) inflow into railways related components has been recorded at US$ 223.28 million from April 2000 to August 2011, according to the Department of Industrial Policy and Promotion (DIPP). The total FDI inflows into the railways and its related components industries have grown due to 100 per cent FDI sanction by the Government of India.

Industry Initiatives

  • The Asian Development Bank (ADB) has extended loans of upto US$ 500 million to Indian Railways. "This programme will help deliver more energy-efficient, safe, reliable and environmental-friendly rail services along key high-density routes," as per Hiroaki Yamaguchi, Principal Transport Specialist, ADB. The Union Government would provide counterpart finance of over US$ 644 million to cover the balance of the costs of the entire programme, estimated at US$ 1.1 billion
  • Ircon International Ltd, a railway construction public sector unit, will install signaling and telecommunication system in the Sri Lankan railway network. The project, to be executed in the northern province of Sri Lanka at a cost of US$ 86.51 million, is part of the US$ 800 million credit India had extended at concessional terms. The Southern coastal railway line project is also being funded under the Government of India credit line of US$ 167.4 million
  • The Delhi Metro Rail Corporation (DMRC) has inked a deal to procure 76 coaches from the Canadian company Bombardier. The US$ 120 million order was placed by Delhi Metro, which now has a length of 185 km and 2 million passengers. The coaches will be used to commission the first eight-coach trains on the HUDA city centre-Jehnagirpuri corridor in May 2013
  • The Northern Railways has opened India's longest railway tunnel through the Pir Panjal range in Jammu & Kashmir. The tunnel which is 10.96 km long is India's longest and Asia's second longest tunnel. The total cost of the tunnel was Rs 391 crores (US$ 79.8 million)
  • Rajasthan State Industrial Development and Investment Corporation Ltd (RIICO) and Ambuja Cement Ltd (ACL) have signed a memorandum of understanding (MoU) for a 7 km long railway siding between the company's cement plant at Rabriyawas in Pali district and Ras railway station in Ajmer Marwar section of North Western Railway. The project in terms of cost of land, laying of tracks and developing other infrastructure will cost approximately Rs 150 crores (US$ 30.6 million)
  • Indian Railways will roll out coaches using German technology by 2016. Four coach factories will replace the indigenously-designed carriages with 4,000 Linke Holfmann Bush (LHB) coaches. However, the Indian Railways is not planning to make a complete shift to LHBs on rail tracks. RCF has invested Rs 114 crore (US$ 23.3 million) since 2007 for the transition. Another Rs 130 crore (US$ 26.5 million) has been sanctioned for phase II of the project, which will be invested over a period of 2-3 years, according to K K Saxena, General Manager, Rail Coach Factory (RCF), Kapurthala
  • As the State Government plans to install a Rs 56,000 crore (US$ 11.43 billion) Ahmedabad-Mumbai-Pune bullet train project, Indian Institute of Management, Ahmedabad (IIM-A) has decided to conduct a research that will quantify the benefits of the service. The service will lead to reduction of carbon foot-prints by around nine times